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The Structure of LibertyJustice and the Rule of Law$
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Randy E. Barnett

Print publication date: 2000

Print ISBN-13: 9780198297291

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198297297.001.0001

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The Incentive Problem

The Incentive Problem

(p.150) Eight The Incentive Problem
The Structure of Liberty

Randy E. Barnett

Oxford University Press

The incentive problem concerns ensuring that persons have an adequate incentive to make choices reflecting the knowledge to which they have access and to discover new information. This problem is addressed by the rights of first possession, freedom from contract, and freedom to contract. The rule of law also addresses the incentive problem by providing a set of legal precepts that do not change too frequently and can therefore be relied upon. To preserve the incentives created by justice and the rule of law, takings must be compensated by requiring the perpetrator of the transfer to make restitution to the victim. The incentive problem created by public goods is less serious than some suppose and free riding can usually be addressed in a number of ways without the need for nonconsensual rights transfers.

Keywords:   first possession, free riders, freedom of contract, incentive problem, incentives, private property, public goods, restitution, several property, takings

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